Why Hospitals and Payers are Recommending Home Care Upon Discharge Instead of SNF or Traditional Home Health Services

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1 Alternative Payment Model Hospital Incentives Aligning with Patient Choice Josh Luke, Ph.D., FACHE Healthcare Futurist and Veteran Hospital CEO University of Southern California, Sol Price School of Public Policy Founder, National Accountable Care Organization and Bundled Payment Collaborative Author, Readmission Prevention: Solutions Across the Provider Continuum Susan Condie, PhD(c), MSN, RN, CNS, PHN, ACNS-BC, CNE, NE-BC Chief Nursing Officer, HomeHero Associate Dean, Nursing Academics at West Coast University Nursing Education Consultant, California Department of Consumer Affairs Abstract Seniors and other hospital patients in the United States have traditionally had the option of being discharged to a skilled nursing facility (convalescent home) for post acute services, or home with nursing and therapy services provided in the home setting. Traditionally, these home-based services have been referred to as "home health." As more Americans retire, home health services are readily accessible and expanding. This growth put tremendous stress on the Medicare fund which pays for senior care services. However, "Home Care," which traditionally has been viewed as non-medical home based services, has also become a booming industry for the cost-conscious in recent years as more Americans reach retirement age. With the passing of the Affordable Care Act in 2010, providers and payers now find themselves responsible for post acute care and continuous patient health, so cost-efficient solutions for post-acute care are thriving. For the first time in history, American hospitals and Insurers are recognizing Home Care as an effective model that achieves the Triple Aim of Health Care reform. Home Care, which is no longer completely non-medical services, has proven to be an integral part of the care continuum for seniors in recent years and a viable solution for keeping patients well, while still honoring their desire to age and heal at home. This paper analyzes the benefits and risks of home care and provides a clear understanding as to why American hospitals are avoiding SNFs and skipping home health, opting instead to refer patients directly to home care as the preferred discharge solution in a value-based model. Introduction: Affordable Care Act Incentives for Hospitals & Payers to Discharge Home Healthcare spending for seniors continues to balloon at alarming rates as 90 percent of seniors prefer to age and heal at home as opposed to in a healthcare facility. With approximately 10,000 baby boomers turning 65 years old every day, the nation s senior population is estimated to increase by more than 30 percent by 2030 ¹. As a result, Medicare expenditures are projected to reach $827 billion by 2018 ². These expenditures will have a significant impact on hospitals, health systems and payers as alternative payment models (APMs) become law. The Patient Protection and Affordable Care Act (PPACA) of 2010 marked the beginning of a transformation in how the Federal Government reimburses acute care hospitals for care delivered. While the triple aim of (PPACA) is improved care, patient satisfaction and lower delivery costs, 1

2 recent recommendations from the Centers for Medicare and Medicaid Services (CMS) also emphasize the importance of involving patients in decisions related to their care. The patient s perception of his or her health care delivery correlates with outcomes and, ultimately, satisfaction. 3 In October 2015, CMS reinforced its desire for patient preferences in the hospital discharge process in a press release, with Acting Administrator Andy Slavitt framing it as a simple but key change that will make it easier for people to take charge of their own healthcare. If this policy is adopted, individuals will be asked what is most important to them as they choose the next step in care whether it s a nursing home or home care." 3 The final part of that quote, "whether it's a nursing home or home care," will drive hospitals to send fewer patients to skilled nursing facilities (SNFs) and home health in 2016 and beyond. Put simply, when given a choice, patients will opt not to go to a SNF unless it is viewed as a last resort. As further evidence of the Federal Government s drive to reduce inpatient post-acute care utilization, the Affordable Care Act mandated the creation of the Community Living Assistance Services and Supports Act (CLASS), a national long-term care insurance program with a daily financial benefit that covers up to (the industry standard) of three hours of home based care per day per enrollee. 4 Fee For Service Drove Inefficient Hospital Discharge Habits & Excessive Spending Case managers and discharge planners have historically been charged with developing a comprehensive discharge plan for each patient in an acute hospital. However, time constraints and information-overload facing doctors, nurses and discharge planners led to discharge plans that were brief, free of detail and often non-existent beyond an order for "discharge to SNF." Hospital discharge planners, some of the most overworked professionals in all of the healthcare industry, are asked to manage the constant flow of multiple patients a day. Coupled with a new case load that completely turns over every four to five days, hospitals pressured case managers in the 1990s and 2000s to facilitate each patient s timely discharge to keep hospital costs low. The requirement to arrange discharge accommodations for acute patients led to less time and less reserved resiliency to adequately document the patient s needs in discharge plans and summaries. These added pressures led discharge planners to the path of least resistance to discharge patients in a timely manner. In short, for patients with a Medicare benefit, a SNF or home health agency (in the event the patient refused a SNF) became the quickest and easiest way to get the patient out the door and open up the hospital bed. Additionally, doctors were hesitant to avoid skilled nursing and home health services even when a patient refused due to concerns the patient would experience an adverse outcome or decline in health after discharge. During this ever-eroding discharge process during the fee for service era, hospitals lost the notion that patients would prefer not to be admitted to a SNF. Essentially, patient preference in level of care was not proven to be a factor, but simply a means of allowing the patient or family member to choose their preferred SNF, and not whether they truly needed SNF-level care unavailable in a home setting. Subsequently, SNF and home health volumes increased dramatically. Patient involvement and preference to avoid skilled nursing was no longer a factor in the conversation. 2

3 US Supreme Court Rules Patients Should be Discharged Directly Home For years, the Federal Government has had legal muscle to encourage doctors and hospitals to send patients home and avoid the SNF, but has had little success doing so. However, the reimbursement model for physicians and providers in the fee-for-service era was prohibitive and inconsistent with that objective. The landmark United States Supreme Court ruling in 1999, Tommy Olmstead v. Lois Curtis essentially ruled that patients in an acute hospital have the right to be discharged to the least restrictive environment when the care team determines that community placement is appropriate and the patient does not oppose the transfer. 5 Furthermore, the ruling also means that institutionalization of patients who may be placed in less restrictive environments often constitutes discrimination based on disability. Thus, operationally, both physicians and hospital case managers must first rule out the least restrictive environment as a safe discharge before considering institutionalizing a patient for post-acute services. 5 The Care Plan Act: Episode-Based Care Gives Way to the Permanent Caregiver One of the benefits of home care as an alternative to traditional home health services is that the caregiver becomes the long-term caregiver, and not a short-term episode-based care taker as is the case in SNFs, home health and other levels of post-acute care. CMS clearly stated their preference to reduce the number of the episodes of care and the volume of caregivers that come along with the episode. This leads to enhanced continuity, efficiency and improved outcomes. While SNF length of stay varies, it is often 20 days or less, and home health is normally a 2-3 month episode. Neither range allows for a long-term caregiver who assumes responsibility and knowledge of the patient s needs as is the case in home care or assisted living. "The proposed rule emphasizes the importance of the patient s goals and preferences during the discharge planning process. These improvements should better prepare patients and their caregivers to be active partners for their anticipated health and community support needs...this rule puts the patient and their caregivers at the center of care delivery," said CMS Deputy Administrator and Chief Medical Officer Patrick Conway, M.D., MSc. "This leads to better care, smarter spending and healthier people." 3 3

4 Incentives for Hospitals and Payers to Consider a Home-First Discharge Option Stating the Case for Home Care as a First Option According to CMS, the national readmission average for homebound individuals was approximately 20 percent in At least one study conducted in 2012 indicated a hospital readmission rate of 6.3% for patients receiving non-medical home care services. ⁴, ⁶ However, preventing unnecessary readmissions is just one of many incentives to encourage more affordable and efficient home based care practices. Home care has proven to be an integral part of the care continuum for seniors receiving other levels of health care and support. For example, research indicates that not only do home care services increase the hours of care and supervision available to a senior, but reduce doctor s visits by as much as 25 percent. In fact, that same study provided evidence that patients suffering from Alzheimer s disease or dementia experienced a reduction in annual doctor s visits of almost 50 percent. It further indicated that home care can delay or prevent the need for additional formal medical care. 7 Is it Safe to Skip a SNF Episode and A Home Health Episode? A recent CMS public comment document stated "Patients discharged to community settings (home and assisted living) may incur lower costs over the recovery episode as compared with patients discharged to institutional settings. 4 A recent article in Annals of Long Term Care, stated "The low cost and community connectedness of long term support service providers in the home may give them an advantage over traditional providers of care transition services, especially when their services are augmented by emerging mobile technology." ⁶ The article further stated "the historical progression of bundled payments from acute to post-acute care, combined with a growing recognition of the value of home and community-based services, 4

5 creates an interesting opportunity for sustainability integrating medical services and long term support services into bundles to more effectively achieve triple aim." ⁶ An abundance of evidence suggests high utilization of skilled nursing upon hospital discharge is more likely a result of an episode-based reimbursement model for providers and doctors than a clinically justified necessity. Further, when a patient declines skilled nursing care, the default option has been traditional home health services. Again, this is a short-sighted approach as home health services are often capped and limited to benefit allowances regardless of whether a patient needs additional care or therapy. Home care, for the most part, has not been offered as an option for patients being discharged from the hospital. There are two main reasons why hospitals rarely offer home care upon discharge: First, hospital discharge planners assume the patient (and family) do not have the financial means to pay for home care, or simply opt not to pay as traditional home health is a covered Medicare benefit. Second, financially vetting each patient and family upon discharge can be a time-consuming process and may delay discharge. Thus, as a result of these two factors, patients are rarely informed that home care is an option upon discharge from the hospital. Home Care is Often a Higher Level of Care than Traditional Home Health Home Care services provide daily living assistance to patients with physical, cognitive, or chronic health conditions. ⁶ This workforce includes personal care attendants and other essential care providers who serve non-medical functions. Non-medical workers contribute eight to ten hours of paid services to older patients and to individuals with disabilities. There is growing evidence that these workers can improve patient experience and outcomes. ⁶ As mentioned earlier, traditional home health services are often capped and limited to what the benefit allows even if a patient is in need of additional care or therapy. With CMS approving reimbursement for home visits, chronic care management and transitional care management, home care providers who partner with physician house call groups can offer a higher level of care and less spending than home health, as a physician or nurse practitioner visit is not a covered home health benefit and therefore not offered as part of the home health episode. Thus, home care often includes a physician, physician assistant or nurse practitioner visiting the patient in the home, whereas traditional home health are conducted with a nurse primarily. 5

6 The Argument for Cost Savings for Payers and Conveners Although organizations traditionally viewed home care as non-medical care and therefore a non-covered benefit, many nationwide have started bucking this trend by employing non-medical home care services as a covered benefit that comes with a much lower cost than traditional home health services. For example, "the average non-medical worker is paid an hourly salary that is approximately 70 percent and 90 percent less than the salary of a nurse or physician, respectively." ⁹ Conclusion Alternative payment models have driven payers and providers to consider non-traditional methods of caring for patients to improve outcomes and control costs. While traditionally non-medical services were not covered benefits (assisted living was viewed as "rent," and non-medical home care was viewed as "babysitting" by many), insurers and conveners find utilizing these non-traditional levels of care can ensure patient satisfaction and lead to significant cost savings. Assisted living placement often causes delays in discharge. However, home care referral and same-day start of care is often the best approach from a quality and financial standpoint as the patient s desire to return to home is honored. WIth the increasing number of alternative payment models and penalty programs being introduced, hospitals, doctors and payers are focusing focusing on how the patient can receive the best care at home. When done correctly, patients can avoid admission to a SNF as well as Medicareor Insurer-based home health services which are often limited and capped at specific amounts. Each of these entities is adopting a home-first mentality and approach. The Improving Medicare Post-Acute Care Transformation Act (IMPACT) requires greater patient involvement in discharge planning, which will lead to more specific discharge plans with the primary goal of allowing a patient to age, recover, and heal in a home-based setting. Ultimately, the patient s specific needs may be less expensive and acute than a $200-$800-per-day SNF stay, or a $3,600 home health episode. As a result, hospital discharge planners and payers are 6

7 moving quickly to consider home-based care with non-medical home health a first-option before considering a SNF stay or home health order. Hospitals and payers should not only revise discharge protocols to consider a home-based discharge first those who are doing so are experiencing enhanced patient engagement and improved patient satisfaction scores. Home care and a home-first mentality upon discharge not only reduce the risk of infection that comes along with a SNF stay, but improve patient satisfaction, reduce spending for care, minimize exposure to readmission penalties and over-utilization of Medicare funds, and enhance an organization s ability to maximize risk pool residuals in alternative payment models. Hospitals that do not adopt a home-first mentality will incur significant losses in alternative payment models and will continue to feel the financial sting of allowing physicians motivated by fee-for-service to regularly dictate inappropriate post-acute plans without offering the patient the option of going home. For insurers, medical groups and other payers, spending a dime to save a dollar often comes with great risk. Home care, however, is not a new service and has been proven to enhance the care continuum for years. Thus, payers are increasingly more willing to suggest discharge home with home care as an option before considering skilled nursing or traditional home health services. References: 1 Cohn DV, Taylor P. Baby Boomers Retire. pewsocialtrends.org Available at: Accessed Office of Legal Counsel for the US House of Representatives. (2010). The Patient Protection and Affordable Care Act. Retrieved from National Health Expenditure Projections cms.gov Available at: healthexpenddata/downloads/proj2012.pdf. Accessed Centers for Medicare & Medicaid Services. (2015). Press release: Discharge Planning Proposed Rule Focuses on Patient Preferences. Retrieved from ml ⁴ Health care meeting proposal: Title VIII. Community Living Assistance Services and Supports Act (CLASS Act). (2015, August 1). The White House. Retrieved from ⁵ Olmstead v. L.C. Supreme Court of the United States. 22 June FindLaw. Web. 2 Feb ⁶ Ostrovsky, A., Cisneros, A., & Morgan, A. (2015). Long-Term Supports and Services as a Logical Next Step in the Evolution of Bundled Payments. Annals of Long-Term Care, 23, ⁷ Olmstead: Community Integration for Everyone. (n.d.) United States Department of Justice Civil Rights Division. Retrieved February 2, 2016 from ⁸ 24Hr HomeCare Conducts Study on Preventing Hospital Readmissions with HealthCare Partners. (n.d.). Retrieved January 18, 2016, from e-partners/ 7

8 ⁹ Centers for Medicare & Medicaid Services. (2015, November 1). Draft Specifications for the Discharge to Community Quality Measure for Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation Facilities (IRFs), LongTerm Care Hospitals (LTCHs), and Home Health Agencies (HHAs). Retrieved January 18, 2016, from cations-for-the-discharge-to-community-quality-measure-for-skilled-nursing-facilities-snfs-inpatient-rehabilita tion-facilities-irfs-long-term-care-hospitals-ltchs-and-home-health-agencies-hhas.pdf 8